Commodities on upward trajectory – TDS

Analysts at TDS explain that following a respectable performance this year and despite the long-in-the-tooth expansion, the commodity complex rally is in no danger of following the fabled Icarus too close to the sun in 2018.

Key Quotes

“With crude oil getting strength from OPEC production discipline, US supply doubts, inventory rebalancing and synchronized global growth lifting demand, the broad commodity complex will have a powerful ally in energy over the next twelve months.”

“ A gentle Fed tightening cycle, at a time when the ECB, PBoC, and other central banks are set to start removing monetary accommodation, should sap some strength from the USD and help the precious metals complex into 2018. The still low global real rates, along with investor desire to hedge in the face of fully valued equity markets should also buoy gold and help the broader commodity complex.”

“Even base metals, which look toppy following their 25 percent jump so far this year, are unlikely to be a powerful force keeping the commodity complex from finishing higher next year — firm China/emerging market growth will be synchronized with the industrial world for the first time since the great recession and lackluster supply growth is set to drive some metals like zinc and copper higher into 2018.”